Shares of Circle Internet Group tumbled 5% to $89.68 on April 9, diverging sharply from a rising S&P 500 (+0.50%) and a flat crypto market, after a new analysis flagged the stablecoin issuer as potentially overvalued and dangerously exposed to falling interest rates. The selloff lands as Goldman Sachs reiterates its Hold rating and insiders keep selling.
• A Valuation Model Says the Stock Is Worth Less Than Half Its Price
A discounted cash flow analysis suggests Circle may be overvalued by 124.6%.
The stock trades at a price-to-sales ratio of 8.34x — above both the software industry average of 3.48x and its peer average of 8.00x. With consensus 2026 earnings pegged at just $0.85 per share — a sharp improvement from a loss of $0.44 — investors are paying a steep premium for a company still proving it can consistently profit.
• Almost Every Dollar Circle Earns Depends on Interest Rates
Circle's revenue is heavily dependent on interest earned on USDC reserves, primarily short-term U.S. Treasuries. A sharp decline in interest rates in 2026 could materially reduce reserve yield, which drove the majority of the estimated $1.85 billion revenue in 2025. One estimate shows a further 100-basis-point decline in Fed rates would reduce reserve income by approximately $737 million annually — a devastating hit to a company with roughly $2.75 billion in full-year gross revenue.
• Coinbase Takes a Massive Cut Before Circle Sees a Dime of Profit
Coinbase receives 100% of reserve income from USDC held on its platform and 50% from other channels. In 2024, $908 million of Circle's $1.01 billion in distribution costs were paid to Coinbase. That means revenue after deducting distribution costs for FY2025 was only $1.083 billion on $2.747 billion in total revenue. This arrangement is locked in — Circle pays more than 50% of its reserve income to Coinbase, and there's no way out unless Coinbase agrees.
• Insiders Are Heading for the Exits
Corporate insider sentiment is negative, with an increase in insiders selling shares relative to earlier this year.
Director Rajeev Date sold 1,273 shares on April 7 at $95.00. The CFO also sold thousands of shares in early April. While pre-planned, the pattern adds pressure to a stock already ~70% off its 52-week high of $298.99.
The bottom line: Circle's USDC stablecoin is growing fast, but the stock prices in a perfect world — one where rates stay high and distribution costs shrink. Neither is guaranteed.